The (Real Estate) Horrors of Hurricane Harvey

The (Real Estate) Horrors of Hurricane Harvey

Turn on your computer, power up the TV, or sit in the car with the radio on, and the horrors of Hurricane Harvey can’t be missed. In addition to the horrific loss of life, it is reported in the New York Post, that up to a quarter of metro Houston’s real estate has been affected by Hurricane Harvey. Monetary totals say it is as much as $55 billion, according to CoStar.

The total losses are impressive. Houston is the sixth-largest US metro area, most of which is very spread out. The city has 1.6 billion square feet of leasable space excluding single-family homes. It is estimated that up to 400 million square feet of commercial space in 12,000 buildings has been affected by flooding.

In terms of the buildings, $16 billion worth are apartments. The highest levels of damage are properties that are 175 million square feet inside the 100-year flood zone. That encompasses 20 million square feet of office space and 72,000 apartments. In addition, 225 million square feet is in the wider, 500-year floodplain, but was also engulfed by between 20 and 25 million gallons in floodwaters.

“Unfortunately, the number of displaced residents could be far larger than current media reports indicate,” CoStar Group founder and CEO Andrew Florance said. “Our property-by-property review of the assets in the flood plain reveals an outsized share consists of low- to moderate-income households, including those in southwest Houston, where the bayous overflowed.”

Houston’s River Oaks, known for its luxurious mansions and where the wealthiest residents live, have also experienced overflows. In Southwest Houston, a dense residential area, CoStar estimates 30 percent of those apartments will be impacted.

Retail and hotel properties were not spared either.

So what happens when there is so much damage? “You basically have to rip out everything down to the studs and rebuild everything,” he said, adding, “Where are you going to find people [to do repair work] if they can’t live in the city?” said Jay Freitag of STR, in a speech to Memphis hotel owners.